Economic Questions

Economic Questions
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Contents
Contents...........................................................................................................................................2
(A)....................................................................................................................................................3
1...................................................................................................................................................3
2...................................................................................................................................................3
3...................................................................................................................................................3
4...................................................................................................................................................4
(B)....................................................................................................................................................5
1...................................................................................................................................................5
2...................................................................................................................................................5
3...................................................................................................................................................6
4...................................................................................................................................................6
5...................................................................................................................................................6
(C)....................................................................................................................................................6
1...................................................................................................................................................6
2...................................................................................................................................................7
3...................................................................................................................................................7
4...................................................................................................................................................7
5...................................................................................................................................................7
REFERENCES................................................................................................................................8
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(A)
1.
Uncertain: This statement is uncertain because if rate of inflation is zero than rate of
interest rate equal to the nominal interest rate (García-Schmidt and Woodford, 2019). On the
other side, in case of positive inflation rate nominal rate of interest is higher than real interest
rate. Basically the change in interest rates is totally based on the rate of inflation.
2.
False: Saving of national income never equal to the investment because when savings
reduces, it also declines the overall investment of the country. Due to Covid-19, lockdown will
impact the flow of cash which minimise the saving and it further affect the investment in
Australia.
3.
True: It is true price of cars manufacturing in Australia which sold to the US consumers
goes up. It means that, change in the price of goods & services or rise in the CPI in the US. CPI
clearly indicates the inflation supply, production of car increases which further rise the price
which automatically increase the inflation.
4.
Uncertain: This statement is uncertain because it is totally demand on the requirement of
reserve in the country due to financial crises. In the financial crises, reserve requirement is high
than reserve multiplier is decreases. On the other side, when requirement reduces than it
maximise the money multiplier. Reserve ratio is a less liquidity a bank may possibly lend-but
this extra cash still healing potions off a financial collapse and firms up the balance sheet. Now,
it is called a contractionary monetary policy when the reserve ratio rises, and when it falls
expansionarily.
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